Down, Not Out: Food Outlets on Online Ordering Disruption
As the food space continues to get disrupted by the likes of Swiggy and Zomato, brands must look at differentiated offerings and focus on pricing to survive
Saddled with deep discounts offered to customers by food delivery start-ups such as Swiggy and Zomato, close to 2,000 restaurants across India recently participated in a ‘log out’ campaign against these aggregators.
However, the movement fizzled in no time due to the unorganised nature of the restaurant industry, according to Varun Puri, founder of popular food brands including Imly and Duty Free. Speaking as part of a panel at Franchise India’s StartUp Summit 2019, Puri talked about the need to have a government body which would be able to hear and resolve their complaints.
Building Identity and a Differentiated Offering
One of the key talking points of the panel discussion was how important it was for companies to build brands and a subsequent recall value. At a time when a food dish from one’s favorite restaurant is just a click away, it has become even more important for food outlets to offer differentiated and unrivaled experiences.
Shalabh Gupta, founder and chief executive officer of Akiva Superfoods, said even though brands have to be built over time with consistency, there is also a need to innovate to stay relevant in the game. Weighing in, Thancos Natural Foods’ managing director Raghavendra Thane said the only way to face the advent of online ordering was to create value and connect to the customer.
Akiva is a homegrown digital-first start-up founded in 2016 that sells healthy food products for those unable to change what they eat. Thancos Natural makes experimental and exotic flavored ice-creams.
Gupta said, Akiva—all of whose products are shipped from a centralized warehouse in Delhi—has seen customers willing to wait for a few days for delivery as there are no alternatives.
Focus on Pricing
Even as restaurants and food delivery firms have had a tussle on multiple fronts including how the latter uses data, the main focus has been on deep discounting and shrinking margins.
Advent of the likes of Swiggy has also resulted in the growth of cloud kitchens or dark kitchens—places that only serve food to customers ordering online, significantly pulling down costs and allowing them to price their offerings at a much lower price range than a traditional restaurant.
However, ordering from such places also runs the risk of no accountability, said Puri. Customers may be running towards discounted foods at the moment, but in the long run it will be quality that would survive, he added.
Despite such competition in the online food business and the incessant need to cut margins by offering discounts, Chaitanya Sabharwal, chief executive officer of Biryani Queen, believes brands need to be smart and price their offering accordingly.
Biryani Queen is a Delhi-based brand that sells 24 different varieties of biryani.